Equity Indices

The ASX200 is set to open firmly this morning, with the Financials and Energy Sectors likely to be most supportive if we take our lead from overseas bourses. At MM, we remain believers in a Santa Rally this year if for no other reason than we’ve seen it so often in the past, with November already up ~4%, it’s hard to recommend chasing strength, but we do see further upside over the coming weeks. Hence, we’re likely to be fairly quiet across our Growth/Income portfolios, at least into December, but some moves are a foot in the Emerging Companies Portfolio this morning.

• The SPI Futures are pointing to a higher opening this morning, up around +0.4, following a quiet session on Wall Street but a strong session through Europe, e.g. UK FTSE closed up +1.3%.

US stocks closed firmly last week, with the influential FANG+ Index within one strong day of a new all-time high, a phenomenal reversal of fortunes following the weakness through September/ October. Our preference remains for a foray to new all-time highs into Christmas, but this is no longer a big call. The upside momentum looks and feels very healthy, with the only question that should be asked is at what level will investors start taking some profits.

• No change; if the FANG+ Index follows the MM roadmap, it will make new all-time highs into December.

The US small caps have found some love over the last few weeks as bond yields have retreated; we believe this will be ongoing into 2024 and can see the Russell 2000 outperforming the highflying NASDAQ over the coming months – a major reversion call compared to the last 10-months.

• We can see the Russell 2000 (small caps) testing the 2000 area into Christmas, or ~10% higher.